Abacus Group had a double treat for shareholders this morning

Nick Sundich Nick Sundich, February 16, 2023

Abacus Group (ASX:ABP) had the most impressive response to its 1HY23 results of any companies releasing results today, not just because of the results themselves, but because it unveiled plans to de-staple (or spin-out) its Storage King assets into a separate REIT.

 

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Abacus Group spinning out Storage King

Abacus Group is a very diversified REIT, but its flagship assets are 127 Storage King outlets throughout Australia. The new REIT, which will be known as Abacus Storage King REIT (ASX:ASK), will exclusively own these assets.

Abacus Group hopes that these assets will gain more investor attention than if they remained part of a REIT as diversified as Abacus is.

The plans will be put to shareholders at an EGM in 3Q23 and if this is approved, it is expected to be listed ‘shortly following the EGM’. Shares in Abacus Group rose by more than 8% this morning.

 

Abacus Property Group (ASX:ABP) share price chart, log scale (Source: TradingView)

 

Some FFO growth is better than none

Turning to Abacus Group’s results, the let down for shareholder was that its profit was down 73%. But its FFO (Funds from Operations) came in at $81.4m – 0.4% higher than 12 months ago, its distribution per security rose 2.9% and its NTA (net tangible assets) rose 0.3% to $3.86.

Even with this morning’s share price jump, these results place the stock at a ~20% NTA discount. It trades a P/FFO of 17x and yields 5.8% on an annualised basis, which we believe is pretty attractive.

 

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